Applying to the IMF

At one level, Pakistan has reshuffled its economic team, changing its Finance Secretary and CBR Chairman, at about the same time as it made a request to the IMF to grant it a nine-month extension in the imposition of the RGST, which is the most important condition for the grant of the remaining two tranches of aid, which have already been delayed since May, when the last payment was made. The change of the economic team will probably not impress the IMF, though the past has seen changes coinciding with approvals of further tranches. As a matter of fact, the last tranche was released when Finance Minister Hafeez Sheikh had recently taken over. The country will remain on the IMF programme longer than this year, when it should have been releasing the last tranche. However, Pakistan will not be allowed to default, because the IMF will keep it barely afloat so long as it continues to fight the USAs war on terror. However, if it does not, the IMF, along with the other US-controlled American financial institutions, will do its best to make Pakistan go under. At the moment, the IMF is denying Pakistan the funds it had promised, making the excuse of a tax which is so clearly harmful for the country that it has provoked protests not just by opposition parties, but also allies of the government. The protest against the RGST should not be dismissed by the government, which has already lost one ally and is in danger of losing more. As the new tax is a financial measure, its defeat, which is an increasing possibility, could bring down the government. That the international financial institutions are still insisting on it, shows that their agenda is not Pakistans economic progress, but the opposite. The agenda of ensuring dependence on American largesse, which can in turn be tied to the war on terror, will make progress under the present government, which has more or less handed over its policies to the USA, and this implies that economic policy is the preserve of the IMF and the World Bank, will probably succeed. The government also has to answer the question of whether, if at all they are given the extension, they would be able to use it fruitfully. If they do have a plan, they have yet to make it public. Further, they should use this as an opportunity not to levy the tax, but to break the IMFS shackles. If this means breaking with the USA, that is welcome too, for it would mean adopting a policy popular with an electorate made restive by the present policies of virtually automatic obedience to the USA. The increasingly desperate attempts to placate the IMF only expose the government, not enable it to solve the peoples problems.